Fed Fines Green Dot $44 Million for Consumer Compliance Violations

By Victor Swezey

The Federal Reserve Board has fined Green Dot $44 million for deceptive and unfair consumer practices and deficient compliance risk management.

The Fed said the Austin, Texas-based fintech company violated consumer law in its marketing, selling and servicing of prepaid debit card products. Violations included failing to disclose tax refund processing fees for a third-party website and blocking access to accounts of legitimate consumers receiving unemployment benefits without putting reasonable procedures in place to help them lift those blocks.

The central bank also accused Green Dot of failing to maintain effective consumer compliance risk management and anti-money laundering programs.

Green Dot Chief Executive George Gresham said statement the practices mentioned in the consent order were multiple years old and that the company has taken significant steps to correct those issues.

"Going forward, we are committed to cooperating and partnering closely with our regulators to ensure all concerns noted in the consent order are addressed and complied with and that our customers are well-served and protected on an ongoing basis," Gresham said.

The Fed said Green Dot must take multiple steps to rectify the violations including hiring an independent third party to strengthen its compliance policies, address the causes of customer complaints and review certain transaction activities.

Write to Victor Swezey at victor.swezey@wsj.com; @vicswezey

(END) Dow Jones Newswires

July 19, 2024 15:04 ET (19:04 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.